Regulator Fines Barclays Over the Pricing of Gold

The Barclays headquarters building in London. Accusations of a trader’s improper gold pricing drew a $43.9 million fine.Credit Neil Hall/Reuters

Updated, 7:53 p.m. | A British financial regulator has fined Barclays $43.9 million after accusing a former trader at the bank of improperly influencing gold prices at the expense of a customer.

The regulator, the Financial Conduct Authority, said it had issued the 26 million pound fine because Barclays failed to adequately manage conflicts of interest between the bank and its customers and for failure in its internal controls. The failures occurred from 2004 to 2013, the regulator said.

The F.C.A. also fined the former Barclays trader, Daniel James Plunkett, £95,600 and barred him from participating in any regulated financial activity. The authority said Mr. Plunkett, who settled with it, had profited at the expense of a customer, who was later fully compensated by Barclays.

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Mr. Plunkett’s improper conduct occurred on June 28, 2012, the day after the regulator and United States authorities announced a $450 million fine against Barclays for improperly influencing global benchmark interest rates, including the London interbank offered rate, or Libor, the regulator said.

“A firm’s lack of controls and a trader’s disregard for a customer’s interests have allowed the financial services industry’s reputation to be sullied again,” Tracey McDermott, the F.C.A. director of enforcement and financial crime, said in a statement. “Traders who might be tempted to exploit their clients for a quick buck should be in no doubt — such behavior will cost you your reputation and your livelihood.”

The authority has been examining whether the way gold prices are set complies with new international standards put in place for benchmarks in light of the Libor scandal.

The Federal Financial Supervisory Authority of Germany, or BaFin, has also acknowledged that it is looking at the trading of precious metals as part of its broader inquiry into potential manipulation of the currency markets.

The process of setting the benchmark price for gold in London dates to 1919. It is set twice a day by five banks that serve as market makers, according to the London Bullion Market Association. Those banks are Barclays, Société Générale, Deutsche Bank, Scotiabank and HSBC.

Deutsche Bank said this year that it would withdraw from fixing gold and silver prices as part of its plan to exit some commodities businesses because of regulatory concerns.

The silver fixing process in London, which has only three participating banks, is set to end in August after Deutsche Bank leaves the panel.

In the case announced on Friday, Barclays said it brought the improper conduct to the attention of the F.C.A’s predecessor agency after it learned of it in 2012 and fully cooperated with the investigation. The bank said it had committed “significant resources” to improving its internal controls on gold fixing.

“We very much regret the situation that led to this settlement,” Antony P. Jenkins, the chief executive of Barclays, said in a statement. “Barclays has undertaken a significant amount of work to enhance our systems and controls and is committed to the highest standards across all of our operations.”

The fines levied against Barclays and Mr. Plunkett were reduced 30 percent because they agreed to cooperate at an early stage of the investigation, the regulator said.

Mr. Plunkett could not be reached for comment on Friday.

On Friday, the F.C.A. accused Mr. Plunkett, a director on the Barclays precious metals desk, of placing orders intended to drive down the price of gold during the 3 p.m. fixing period in London on June 28, 2012. Doing so allowed Barclays to avoid a $3.9 million payment to customer on an options contract that was tied to the price of gold during that period, the regulator said.

As a result, Mr. Plunkett’s trading book, excluding hedging, recorded a profit of $1.75 million. Mr. Plunkett was responsible for pricing products linked to the price of precious metals and managing Barclays’s exposure to those products.

Soon after the fix that day, the customer sought an explanation of what had happened, the regulator said. At the time, Mr. Plunkett failed to disclose his trading activity and misled his employer and the regulator about his actions, the regulator said.

The fine is the latest black eye for Barclays, which has struggled to rebuild its reputation since it became the first bank to admit to wrongdoing in the Libor scandal two years ago.

Mr. Jenkins has been trying to change the bank’s culture since he took the top job after the Libor scandal in 2012. He recently announced an aggressive reshaping of its business.

A version of this article appears in print on 05/24/2014, on page B3 of the NewYork edition with the headline: Regulator Fines Barclays Over the Pricing of Gold.